Brighter days ahead for the “sandwiched class”

So, all this talk about the budget debate being labelled a ‘Robin Hood’ budget (taxes the rich to fund the poor) has made middle-class Singaporeans – the “sandwiched class” – wonder what’s in it for them.

DPM Tharman said he hasn’t forgotten about the “sandwiched class”, and is in fact paying more attention to this group which forms the majority of Singaporeans.

So what exactly is at play here?

There are three major areas of concern to the middle-income group. Here are the budget highlights and what people have to say:

1. Salaries

The big item on the debate agenda was the Wage Credit Scheme, which DPM Tharman announced was designed to include middle-income earners who earn up to $4,000 a month.

He said this will help businesses push forward with investing in their employees to increase productivity, then also grow the economy at the same time since the gahmen don’t want so many foreign workers.

Good move, but how come not everyone seems convinced that this is a long-term measure?

A caller on Mediacorp talkshow “VoicesTODAY” said that the Wage Credit Scheme is a good move to solve a problem but how is it going to be funded? Use taxpayers’ money or employers pay workers’ increased salaries?

Basically, wages are going to be higher for three years, but then what? What happens when the government stops co-funding the salary increments? Will workers then be forced to take a pay cut? Or will employers start firing people to re-balance their expenses?

2. Taxation

DPM Tharman also said how taxes on the middle-income earners in Singapore are much lower than in other developed economies (more “progressive” in their taxation policies, as he put it).

Got personal income tax rebates, property tax savings, and changes in the foreign domestic worker concessionary levy to help middle-income families cope with the rising costs of living some more.

For example: a typical middle income family with 2 school-going age children, a domestic helper and a combined income of $6,300. The family would get savings of about $1,500, which he called a “decent sum”. And this doesn’t include other subsidies from healthcare, childcare, and tertiary education.

However, an executive that FSaaM spoke to felt that the tax reforms won’t help her significantly.

Melissa Tan, a working mother in her thirties with two young children, thinks that “The new budget will improve my standard of living by $50 due to the decrease in maid levy. But as I own a house that I do not live in, I expect my property tax on this house to increase. I intend to see my MP about this as I find it unfair as the house that I own is not for investment purposes. Rather I am renting another house, so the rental from my own house goes towards paying rental for the house we are living in.”

3. Healthcare

DPM Tharman then said the middle-income group“will be a major beneficiary of the healthcare financing review”.

He promised a $1 billion top-up to the Medifund to help Singaporeans foot their medical bills as well as a $250 million top-up to the ElderCare Fund to support the growing demand for long-term care services.

He also said that the government is targeting to lower the out-of-pocket medical expenses of Singaporeans.

Jack Lim, an executive in the foodservice industry, told FSaaM that he shares the sentiment of many of his peers – that it’s still too expensive to get sick in Singapore:

“I have ageing parents and they depend on me if they need to go to the clinic or hospital. Luckily for me I bought insurance for them, but there are still out-of-pocket expenses that I need to pay for. Some of my friends are even more stretched than I am as their parents aren’t eligible for insurance coverage due to pre-existing medical conditions,” he said.

Hopefully this feedback will encourage politicians and policy-makers adjust their proposals.